Business Plan of OKI Includes 800 Layoffs

On March 28, OKI Data told an investor group it had a strategy for improving its declining Printer business. The plan includes the layoff of 800 workers. OKI stated that while profitability has improved in its other businesses, the Printer business has reported increased operating losses as sales have steadily fallen from ¥185.8 billion in 2007 to ¥110.0 billion in 2012. Over the same period, operating income of ¥7.9 billion in 2007 eroded into an operating loss of ¥9.5 billion in fiscal 2012.

OKI indicates dramatic structural reform is needed to recover profitability. To do this, OKI announced plans to reduce fixed costs, reform its design and procurement functions, and strengthen management.

To reduce costs, OKI will implement several measures. It will first reduce its staff from 6,800 to between 6,000 and 6,100 by the end of 2013. OKI will also reduce indirect fixed costs in its sales and manufacturing operations. OKI indicates that these efforts should save it ¥2.0 billion in 2013 and from ¥2.5 billion to ¥3.0 billion in 2014.

By changing its design and procurement practices, OKI expects that ¥2.0 billion can be reduced each year. It plans to standardize its printer engines, reducing the number of platforms by 60% between 2012 and 2015. It wants to reduce the number of software platforms by 60% and its suppliers by 60% between 2012 and 2015. OKI plans to shorten development time by 30% by 2015. Some changes to its management structure are underway as well.

In addition, OKI will launch more MFPs. The company expects the MFP market to post a 14% annual growth rate. OKI recently launched new A4 color MFPs, with more A4 MFPs to come in 2013 and 2014. It hopes to tap into the “Office Solution Market”. To do so, it plans to expand its Pro Series with new, cost-effective LED-based narrow- and wide-format printers. These products can replace more expensive commercial printing and high-speed industrial machines.

OKI believes these measures will enable it to meet net sales targets for the Printer business. The targets are set as ¥115 billion in 2013, growing to ¥120 billion in 2014 and ¥130 billion in 2015. Its operating income is expected to be ¥4.0 billion in 2013, ¥7.0 billion in 2014, and ¥10.0 billion in 2015.